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We recommend a buy in the stock of Rolta India from a short-term perspective. It is seen from the charts of the stock that it resumed its downtrend, after encountering resistance around Rs 188 in November 2010. Since then, the stock was on a medium-term downtrend until it found support at Rs 128 last week. While trending down, the stock has formed a falling wedge pattern (a bottom reversal pattern) spanning between December 2010 and early February 2011.
On February 14, the stock gained 3.6 per cent breaching its falling wedge pattern, medium-term down trend-line and its 21-day moving average. Moreover, triggered by positive divergence displayed in the daily moving average convergence divergence indicator the stock appears to have changed direction.
The daily relative strength index is on the brink of entering into the bullish zone from the neutral region and the weekly RSI has entered into the neutral region from the bearish zone. Daily MACD has signalled a buy and is inching towards positive territory. We are bullish on the stock from a short-term perspective considering its penetration of falling wedge pattern. We anticipate it to rally until it reaches our price target of Rs 152.5 or Rs 157 in the forthcoming trading sessions. Traders with a short-term perspective can consider buying the stock with stop-loss at Rs 144.
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